To determine the equilibrium price level and equilibrium level of real GDP, the aggregate demand and aggregate supply must
A) be considered separately.
B) intersect.
C) be disregarded.
D) be considered as a multiplier.

Question

Quizplus · Accepted Answer

In order to determine the equilibrium price level and equilibrium level of real GDP, we need to find the point where aggregate demand and aggregate supply intersect. This is the point at which the quantity of goods and services demanded matches the quantity supplied, and is therefore the point at which the economy is in equilibrium. Option A is incorrect because we cannot consider the aggregate demand and supply separately, as they are interdependent and affect each other. Options C and D are also incorrect because they do not accurately reflect the process for finding equilibrium in the economy.

To Determine the Equilibrium Price Level and Equilibrium Level of Real